MSB (Money Services Business) is a business that transmits money, exchanges currency, cashes cheques, or issues, sells or redeems money orders, traveller's cheques or stored value for customers, including virtual currency exchange and transfer. In the US, MSBs register with FinCEN under the Bank Secrecy Act by filing Form 107 within 180 days of establishment and renewing every 24 months; in Canada, FINTRAC keeps the register. FinCEN registration is a notification, not an approval, and does not authorise money transmission, which also needs state money transmitter licences with net worth, bond and investment rules. Money transmitters have no volume threshold, unlike other categories. Buyers pay for the state licences, partner relationships and compliance record rather than the registration.
How does FinCEN MSB registration work
A new MSB files FinCEN Form 107 within 180 days of being established, signed by an owner or controlling person. Registration is renewed every 24 months, by 31 December of the renewal year, and the firm must keep a copy of the filing and its supporting documents at a US location for five years, along with a list of the agents authorised to sell its services. Registration is a notification to FinCEN rather than an approval: FinCEN does not assess the business plan or capital the way a licensing regulator does.
Which businesses are MSBs
Currency exchangers, cheque cashers and issuers or sellers of money orders, traveller's cheques and stored value only count as MSBs if they handle more than $1,000 for any person on any day in that activity. Money transmitters have no threshold.
Illustrative example: a fintech app that lets users send $50 to friends is a money transmitter from its first transfer. A hotel that exchanges up to $300 of foreign currency per guest per day stays below the threshold and is not a currency exchanger for MSB purposes.
MSB registration vs money transmitter licence
FinCEN registration does not authorise a business to move money. Money transmission also needs a money transmitter licence in nearly every state where the firm has customers, and New York requires a BitLicense for most virtual currency business on top. State licences bring net worth, surety bond, permissible investment and examination requirements that FinCEN registration does not. Startups often launch through a partnership with a licensed transmitter or a sponsor bank while their own state applications are pending.
MSB registration in Canada
Canadian MSBs must register with FINTRAC before they start operating, and FINTRAC charges no registration fee. The Canadian definition also covers virtual currency dealing, crowdfunding platforms, armoured car services and private ATM acquirers. A firm with no Canadian place of business that directs services at clients in Canada registers as a foreign money services business.
What it means for buying an MSB
A FinCEN registration has little value on its own, because anyone can file one. Buyers pay for the state licences, the banking and partner relationships, and the compliance record behind them, and each state licence needs its own change-of-control approval before completion. Due diligence covers SAR filing history, independent AML testing results and federal Bank Secrecy Act examinations, which the IRS carries out for most non-bank MSBs, along with any state examination findings still open.